In our previous monthly update, we noted Latin America had the best returns and China funds struggled. In April, we saw an almost complete reversal of pandemic trends, with bonds at the top and tech at the bottom.
Within our 800-fund dataset, only 180 had a positive return last month. What’s more, only 143 funds have seen returns above 0% this year overall.
UK-focused funds didn’t do too badly as rising oil prices helped prop up the FTSE. Liontrust UK Growth was the best performer among UK vehicles, with a 1.94% return.
But this was some way behind the month’s top performers. There was no clear winner in April, and the top 10 featured a wide range of categories, from emerging markets to allocation. The number one slot went to a systematic trend fund, AQR Managed Futures, which returned 10.59% in April. It was the only fund with double-digit growth, and is also the second biggest gainer so far this year, with a rise of 33.41%.
BGF’s World Energy Fund continued its run near the top. In the past month it returned 5.79%, which wasn’t even its strongest month so far this year. Energy prices appeared to plateau in April, with less volatility than we’ve seen recently. Still, the fund is up 42.32% in 2022, making it by far the biggest gainer this year so far.
Despite a torrid time for bond investors, an overwhelming majority of the 180 funds with a positive return over the past month were from various bond categories, like US diversified, Asia high-yield, or global flexible.
For example, the AQR fund holds 83% of its portfolio in bonds. Several allocation funds also did well as a result, like USD flexible or moderate allocation. The strong performance of US bonds was due to a strengthening dollar outweighing falling bond prices.
Three emerging markets equity funds made it into the top 10 in April: Fidelity Indonesia, FFSA Indian Subcontinent and Stewart Investors Indian Subcontinent Sustainability. The Morningstar Indonesia Index has been steadily climbing all year, up 12.76% to date. However, the India Index has been a bit more volatile and is down 4% in 2022.
Tech funds remained solidly entrenched at the bottom of the table last month. The worst performer was T. Rowe Price’s Global Tech Fund – down 16.68% over the past month, and down 34.89% so far this year. Of all rated funds, this has seen the biggest losses in 2022.
Four Baillie Gifford funds have also struggled to move upwards. All of them have a global focus and suffered losses of around 13% in April and around 30% in 2022.
As John Rekenthaler noted in his column this week, growth stocks – a Baillie Gifford favorite – could be bottoming out. Questioning whether a comeback is possible, Rekenthaler said: “If growth stocks are to recover, they require one of two circumstances: either the economy must change, or they must become too cheap for investors to ignore.”
But it’s not just tech funds that have had poor results. The bottom performers are from a range of categories, from global small and mid-caps to US large-caps. Beyond the bottom 10 we also find Japan large-cap and European flex-cap funds.
Finally, we also note a return to the negatives for Latin American equity, which made a comeback last month. Abrdn Latin American Equity is down 8.16% in April – however, the fund is still up 17.32% so far this year.
George Holan is chief editor at Plainsmen Post and has articles published in many notable publications in the last decade.